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2011 Review, 2012 Outlook ZM Investment Group Helping Clients “Live Well” for over 25 2011 Review, 2012 Outlook ZM Investment Group Helping Clients “Live Well” for over 25 y Susyn Wagner Investment Advisor, CFP, CIM 403 -508 -3252 Susyn. [email protected] ca Discretionary Money Management Services Dylan Brigley BA 403 -260 -0494 Dylan. [email protected] com

Welcome! • Introductions • Canadian Market Recap • Canadian Outlook • US Market Recap Welcome! • Introductions • Canadian Market Recap • Canadian Outlook • US Market Recap • US Outlook • Q 1 2012 Page 2

S&P/TSX Composite Index Performance 2011 (Price Return) • Adding it all up, 2011 was S&P/TSX Composite Index Performance 2011 (Price Return) • Adding it all up, 2011 was a year to forget, with the S&P/TSX Composite Index losing just over 11%. • Despite the volatility of the markets, 2011 represents only the 3 rd losing year in the past 10 year period (2002, 2008). *CPMS “ 2011 4 th Quarter Review” – Jan 16 th, 2012 Page 3

2011 S&P/TSX Sector Total Returns GICS Sectors: 2011 Total Returns • A defensive posture 2011 S&P/TSX Sector Total Returns GICS Sectors: 2011 Total Returns • A defensive posture was the only reward in 2011, with Telecom, Utilities and Consumer Staples as the standout performers • Dividend stocks were a good place to hide, and investors did just that for the majority of the year in Telecom and Utility names, which were the only groups to register 4 consecutive positive quarters *CPMS “ 2011 4 th Quarter Review” – Jan 16 th, 2012 Page 4

Let’s Compare Yields The Asset Mix Decision • The asset mix decision continues to Let’s Compare Yields The Asset Mix Decision • The asset mix decision continues to strongly favor increased equity exposure – relative yields on fixed income versus the TSX remain at all time extremes • The last time the market reached these levels was in December 2008, just before the TSX began a significant move up *CPMS “ 2011 4 th Quarter Review” – Jan 16 th, 2012 Page 5

Canadian Economic Picture Economic Outlook ------Capacity Utilization ------Unemployment rate ------Inflation Rate • The Canadian Canadian Economic Picture Economic Outlook ------Capacity Utilization ------Unemployment rate ------Inflation Rate • The Canadian economic picture remains strong with utilization rates continuing to improve, with inflation and unemployment levels remaining steady *CPMS “ 2011 4 th Quarter Review” – Jan 16 th, 2012 Page 6

Muted, Positive Growth REAL GDP GROWTH RATES 2003 -07 AVG 2008 AVG 2009 AVG Muted, Positive Growth REAL GDP GROWTH RATES 2003 -07 AVG 2008 AVG 2009 AVG 2010 AVG 2011 E 2012 E 2013 E World 4. 8 2. 8 -0. 7 5. 1 3. 8 3. 2 3. 8 USA 2. 7 -0. 3 -3. 5 3. 0 1. 8 1. 9 Canada 2. 6 0. 7 -2. 8 3. 2 2. 4 2. 0 2. 1 Eurozone 2. 1 0. 0 -4. 2 1. 8 1. 6 -0. 3 1. 2 UK 2. 7 -1. 1 -4. 4 1. 8 0. 9 1. 1 1. 9 Japan 2. 1 -1. 2 -6. 3 4. 1 -0. 2 2. 2 1. 6 Brazil 4. 0 5. 2 -0. 6 7. 5 3. 8 3. 6 4. 2 Russia 7. 5 5. 2 -7. 8 4. 0 4. 3 4. 0 4. 1 India 8. 6 6. 2 6. 8 10. 1 7. 8 7. 5 8. 1 China 11. 6 9. 2 10. 3 9. 2 8. 3 9. 0 • While GDP growth rates world wide have eased off somewhat, emerging markets continue to show strength. • India, China, and Brazil have consistently outpaced the world average. • BRIC Countries look to have downside risk contained, thanks to tightened monetary policy intended to ward off high inflation. • Growth is expected to be somewhat muted through to 2013, although remain positive. • Canada’s GDP Growth Rate has faired quite well, keeping pace with global rate. CIBC – A Look To The Future, 2012; Avery Shenfield – “Economic Outlook – The Fiscal Squeeze” Page 7

Canada Still An Attractive Investment AAA Rated Credits Thinning Out CANADA Lack of Market Canada Still An Attractive Investment AAA Rated Credits Thinning Out CANADA Lack of Market Political Confidence in Disharmony European Solution In USA • International capital should continue to seek out Canada. • This will help offset the current account deficit and should allow Canadian governments to more cost effectively fund borrowing programs. • Chinese direct investment in Canada jumped by 69% between 2008 and 2009, thanks in large part to investments in energy and natural resources. • Total Chinese investment in Canada for 2011 was $14 billion. CIBC – A Look To The Future, 2012; Avery Shenfield – “Economic Outlook – The Fiscal Squeeze” Page 8

Flow to Canadian Securities • Global investors have taken notice of Canada like never Flow to Canadian Securities • Global investors have taken notice of Canada like never before, buying $300 bln of CDN Securities since the beginning of 2009; equal to the total net investment over the previous 15 years. • CDN investment did slow down in 2011, but nowhere near the pace seen in other areas of the world. CIBC – A Look To The Future, 2012; Warren Lovely – “Canada: Better Positioned, Hardly Infallible” Page 9

The Canadian Economy • Since September, CIBC has published 2 studies indicating that Canada The Canadian Economy • Since September, CIBC has published 2 studies indicating that Canada is in the midst of an infrastructure “super-cycle” which could be the main driver of economic growth over the next several years. • With the recession induced slowdown of government spending on municipal projects winding down, energy sector infrastructure projects are and will be a main channel of investment and job creation. • Oil sands and pipelines, power generation, and electricity distribution and generation could create over one million jobs over the next 20 years. • Another study tallied 28 current and proposed projects in energy infrastructure alone, totaling close to $78 billion in investment. • Canada is in a great position to further tap into its resource potential using private capital, strengthen and diversify its energy export markets, create more than one million jobs; and still maintain one of the lowest debt to GDP ratios in the world. Page 10

S&P 500 Performance In 2011 Despite midyear rumblings over the US debt ceiling impasse, S&P 500 Performance In 2011 Despite midyear rumblings over the US debt ceiling impasse, and Eurozone debt and default concerns, the year ended at almost exactly the same level where it started *CPMS “ 2011 4 th Quarter Review” – Jan 16 th, 2012 Page 11

2011 S&P 500 Sector Returns GICS Sectors: 2011 Total Returns Despite negative returns in 2011 S&P 500 Sector Returns GICS Sectors: 2011 Total Returns Despite negative returns in only 3 sectors, representing just 28% of the index, the S&P 500 returned 2. 1% for the year; roughly equal to its dividend yield *CPMS “ 2011 4 th Quarter Review” – Jan 16 th, 2012 Page 12

The Asset Mix Decision A late year flight to safety has again pushed 10 The Asset Mix Decision A late year flight to safety has again pushed 10 year bond yields below the yield of the S&P 500, a level not seen since the 2008/2009 correction *CPMS “ 2011 4 th Quarter Review” – Jan 16 th, 2012 Page 13

US Economic Picture Economic Outlook 2011 ended with signs of continued recovery in employment US Economic Picture Economic Outlook 2011 ended with signs of continued recovery in employment and capacity utilization rates and a slight decrease in inflation, although at 3. 4% this was still high compared to the recent past *CPMS “ 2011 4 th Quarter Review” – Jan 16 th, 2012 Page 14

What can we expect from Q 1 2012? *CPMS “ 2011 4 th Quarter What can we expect from Q 1 2012? *CPMS “ 2011 4 th Quarter Review” – Jan 16 th, 2012 Page 15

CIBC ISC Targets Recent TSX 2012 E 12, 500 13, 000 1, 315 1, CIBC ISC Targets Recent TSX 2012 E 12, 500 13, 000 1, 315 1, 260 TSX Yield (Weighted) 2. 96% 2. 30% T-Bills 0. 90% 1. 10% 10 -Year Bond Yield 2. 18% 2. 70% S&P 500 Yield (Weighted) 2. 38% 2. 20% T-Bills 0. 02% 0. 30% 10 -Year Bond Yield 1. 97% 2. 70% $101. 17 $103 Gold (US$/oz) $1, 750 $1, 900 C$/US$ 0. 9993 1. 035 US$/C$ 1. 0006 • CIBC Investment Strategy Council recommends being overweight equities for the coming year. • US and Canadian bond yields are so low that equities are fairly attractive by comparison. • The US economy is showing signs of very slowly gaining some momentum and S&P and TSX ROE (corporate profitability) is growing, again showing signs of an economic recovery. • Historically speaking, it is best to buy equities when bond yields appear to be unusually low, and when ROE is growing. 0. 9662 S&P 500 Canada United States WTI Oil (US$/Bbl) CIBC – A Look To The Future, 2012; Avery Shenfield – “Economic Outlook – The Fiscal Squeeze” Page 16

Mid to Long Term Outlook Many industry participants feel that return expectations built on Mid to Long Term Outlook Many industry participants feel that return expectations built on current yield, potential GDP growth based earnings growth, and reversion to a mean P/E ratio could mean the following: 10 Year Returns: Fixed Income 2 -3% Equities (Index) 7 -8% Premise: 3% for real GDP growth + 1. 5% for inflation + 3. 0% for dividend yield = 7. 5% long-term total return on stocks. 50/50 Asset Mix = 5% Nominal Rate of Return • A realistic and informed projection of returns based on the next decade can be useful when making decisions about asset allocation, funding and investment strategy. ** The comments and opinions expressed herein are the result of work done by The ZM Investment Group's. They may differ from the opinions of CIBC World Markets Research Department and should not be considered representative of CIBC World Markets Inc. 's beliefs, opinions or recommendations. This information, including any opinion, is based on various sources believed to be reliable, but its accuracy cannot be guaranteed. It is for information only, is subject to change at any time. Page 17

A Quote “With rapidly changing conditions, investors can't change the direction of the wind, A Quote “With rapidly changing conditions, investors can't change the direction of the wind, but we can adjust our sails (and our portfolios) in an attempt to reach our destination of good investment returns” Page 18

The ZM Investment Group “A Proactive Approach to Financial Planning and Investing” Our goal The ZM Investment Group “A Proactive Approach to Financial Planning and Investing” Our goal is to provide our clients with a variety of tailored investment solutions, including; ü An in depth review of financial situation ü A long term financial strategy ü Creation and implementation of asset allocation policy ü A defined risk policy ü Ongoing monitoring and maintenance of portfolio ü Maximize return potential, while reducing risk through diversification Page 19

Investment Philosophy & Process The ZM Investment Group’s vision revolves around the goals of Investment Philosophy & Process The ZM Investment Group’s vision revolves around the goals of developing, communicating, and implementing effective strategies to meet our clients’ long-term financial needs q STEP 1 Investment Strategy Review Detailed profiling of financial situation, time horizon, risk tolerance level, goals, and expectations q STEP 2 Portfolio Structure and Manager Selection Prepare the Investment Policy Statement, incorporating asset allocation strategy recommendation q STEP 3 Professional Portfolio Management Selection and implementation of specific investments that are consistent with the Investment Policy Objectives q STEP 4 Goal Monitoring Regular performance reporting including a summary of individual securities held within the portfolio Page 20

Questions? Thank you for your time! www. cibcwoodgundy. com CIBC Wood Gundy is a Questions? Thank you for your time! www. cibcwoodgundy. com CIBC Wood Gundy is a division of CIBC World Markets Inc. , a subsidiary of CIBC and a Member of the Canadian Investor Protection Fund and Investment Industry Regulatory Organization of Canada. If you are currently a CIBC Wood Gundy client, please contact your Investment Advisor. Page 21